System and method for forming a financial instrument indexed to entertainment revenue

ABSTRACT

A method for forming a securities bundle indexed to entertainment revenue includes determining a first funding amount for a first entertainment event. A second funding amount is determined for a second entertainment event. Next, a dividend schedule is determined for the first and second entertainment events. A securities bundle is formed at least partially based on the funding amounts and the dividend schedule, with the securities bundle comprising a first security and a second security. The first security is associated with the first entertainment event and the second security is associated with the second entertainment event.

RELATED APPLICATION

This application claims priority under 35 U.S.C. §119 of provisionalapplication Ser. No. 60/537,325 filed Jan. 16, 2004.

TECHNICAL FIELD OF THE INVENTION

This disclosure relates generally to systems and methods for financialinvestments. More specifically, the disclosure relates to a financialinstrument indexed to entertainment revenue.

BACKGROUND OF THE INVENTION

Current entertainment companies are typically corporations orpartnerships that fund, produce, or otherwise participate in thecreation or organization of many entertainment events. Theseentertainment events normally require various amounts of funding basedon a number of criteria. For example, if the entertainment event is amovie, then the level of funding may be based on the chosen director forthe film, the selected actors, the special effects or Computer GeneratedImagery (CGI), locations desired for the film, appropriate advertising,and many other factors. In another example, if the entertainment eventis a concert, then the level of funding may be based on an arena,security at the arena, transportation costs for the performing artists,and such. Occasionally, funding for one of the events may be moredifficult to obtain because of poor public or industry perception of theproject, lack of information about or knowledge of the project,inaccessibility to the funding process by interested investors, possibleexclusivity of the particular entertainment industry, the particularfunding needs being too great for one or a few investors, or for anyother reason. Once funding is obtained and the event is produced,created, hosted, or otherwise premiered, the entertainment companyreceives at least portion of the revenues. Typically, as in the case ofmovies, this portion is based on the ticket sales of the movie, lessdistributor fees.

SUMMARY OF THE INVENTION

In one embodiment, this disclosure provides a method for forming asecurities bundle indexed to entertainment revenue. The example methodincludes determining a first funding amount for a first entertainmentevent. A second funding amount is determined for a second entertainmentevent. Next, a dividend schedule is determined for the first and secondentertainment events. A securities bundle is formed at least partiallybased on the funding amounts and the dividend schedule, with thesecurities bundle comprising a first security and a second security andthe first security associated with the first entertainment event and thesecond security associated with the second entertainment event.

In another embodiment, this disclosure provides a method for purchasinga securities bundle indexed to entertainment revenue. This examplemethod includes selecting a securities bundle offered by aspecial-purpose entity, with the securities bundle comprising a firstsecurity and a second security and the securities bundle associated witha closing date. The first security is associated with a firstentertainment event and the second security is associated with a secondentertainment event. A return value is identified and associated withthe securities bundle. A purchase price is identified and associatedwith the securities bundle. The selected securities bundle is thenpurchased at least partially based on the purchase price and the returnvalue.

In yet another embodiment, this disclosure provides a method forproviding an after-market for securities indexed to entertainmentrevenue. This example method includes identifying a securities bundlecomprising a first and second security, with the first securityassociated with a first entertainment event and the second securityassociated with a second entertainment event. The first security isoffered in an after-market for the buying price. A market price isdetermined for the first security in the after-market.

In a further embodiment this disclosure provides an electronic systemfor offering, purchasing, selling, trading, searching, or otherwiseprocessing securities associated with entertainment events.

In another embodiment, a system and method is provided for trading thesecurities bundle that includes unbundling the securities bundle intothe component securities for sales in a secondary market, such as anECN. Moreover, futures contracts for one or more of the componentsecurities may be traded on a futures exchange.

The invention has several important technical advantages. Variousembodiments of the invention may have none, some, or all of thesetechnical advantages. One technical advantage of the present inventionis that it increases accessibility to the funding process through theuse of systems architected into appropriate networks to connectinvestors with facilitators and those seeking to fund a project. Thisprovides an opportunity for a wider range of investors to participate inat least some portion of the entertainment industry, whether movies,sports, music, or others. This network may also increase the reliabilityand accuracy of transactions, thereby increasing transaction volume.Moreover, this may provide for real-time communications among parties,thereby increasing the speed and efficiency of transaction processing.Further, the present invention may provide entertainment companies witha new source of financing for expensive or risky entertainment events.The present invention may create or allow for the creation of asecondary or after-market for the investments in the entertainmentevents. The present invention may also allow for a new data supplierindustry responsible for compiling, storing, and providing informationrelated to the entertainment events for investor research. Othertechnical advantages of the present invention will be readily apparentto one skilled in the art.

BRIEF DESCRIPTION OF THE DRAWINGS

For a more complete understanding of the present disclosure and itsadvantages, reference is now made to the following descriptions, takenin conjunction with the accompanying drawings, in which:

FIG. 1 illustrates an example system for offering one or more securitiesbundles indexed to entertainment revenue in accordance with oneembodiment of the present disclosure;

FIG. 2 is a high-level view of one embodiment of the securities bundleoffered by the system in FIG. 1;

FIG. 3 illustrates an example timeline of a securities bundle inaccordance with one embodiment of the present disclosure;

FIG. 4 illustrates an example method for forming a securities bundleindexed to entertainment revenue in accordance with one embodiment ofthe present disclosure; and

FIG. 5 illustrates an example method for purchasing a securities bundleindexed to entertainment revenue in accordance with one embodiment ofthe present disclosure;

FIG. 6 illustrates an example after-market system for offering futuresor secondary market transactions based on the securities bundlesinitially offered in the system of FIG. 1; and

FIG. 7 illustrates an example method for transacting a security from asecurities bundle in an after-market according to one embodiment of thepresent disclosure.

DETAILED DESCRIPTION OF THE DRAWINGS

FIG. 1 illustrates an example system 100 for forming, issuing, and/oroffering a securities bundle 140 indexed to entertainment revenue forone or more entertainment events produced or sponsored by at least oneentertainment company 110 or its affiliates in accordance with oneembodiment of the present disclosure. For example, system 100 may be afinancial market, electronic and/or manual, involving any portion of alife cycle of securities bundle 140. In certain embodiments, system 100allows investors 130 to participate in a popular, yet often exclusive,industry, while attempting to receive a positive rate of return oninvestment. System 100 further provides a new—and reusable—source offunds for entertainment companies 110, thereby at least partiallyrelieving those companies 110 from having to obtain alternativefinancing or keep a large cash reserve. In the illustrated embodiment,system 100 includes entertainment company 110, a special-purpose trust120, and one or more investors 130. But system 100 contemplates anyappropriate partial configuration such as, for example, entertainmentcompany 110 directly offering securities bundle 140 to investors 130.

Entertainment company 110 is at least a portion of a business unit ofany appropriate size that funds, produces, hosts, sponsors, presents oris otherwise financially involved in a plurality of entertainmentevents. Entertainment company 110 may reference any suitable businessorganization (including one or more divisions), corporation,partnership, individual, entity formed for the special purpose of one ormore of the particular events, financial or commercial alliance amongseveral businesses, or any subsidiary, affiliate, assignee, associate,employee, or agent thereof. For example, entertainment company 110 maybe a movie studio, a music production company, a concert promoter, asports team or league, or any other suitable company providingentertainment services or products. The entertainment events offered byentertainment company 110 (and at least partially represented insecurities bundle 140) may be substantially similar, such as multipleconcerts by one musical artist, or not, such as a plurality of differentmovies and television shows.

Investors 130 are individuals or entities qualified to participate insystem 100 and to fund entertainment events offered by one or moreentertainment companies 110. Generally, an investor 130 provides fundsto entertainment company 110, in any appropriate manner, for theproduction and presentation of entertainment events by purchasing one ormore securities bundles 140. For example, investor 130 may purchasesecurities bundles 140 from entertainment company 110 throughspecial-purpose trust 120. Special-purpose trust 120 may provide thefunds to the appropriate entertainment company 110 immediately oraccording to a suitable funding schedule. Once an investor 130 fundsparticular entertainment events associated with a securities bundle 140,the corresponding entertainment company 110 provides returns on theevents to investors 130 according to a dividend schedule. In oneembodiment, investor 130 may be allowed to select from a plurality ofsets of bundles 140, with each set of securities bundles 140 associatedwith events distinct from other sets. This would allow investor 130 toselect bundles 140 based on any suitable criteria such as, for example,rates of return, personal likes or dislikes, popularity, and others.Investor 130 may work through broker 160, or other similar individual oragent, to obtain additional research, knowledge, or agent-likefunctionality. The particular securities bundles 140 a particularinvestor 130 is allowed to purchase may depend upon the qualificationsof the particular investor 130 within system 100.

Special-purpose trust 120 is one or more trusts, or otherspecial-purpose entities, in which a trustee 150 or other person orentity fulfilling similar functions is interjected between investors 130and entertainment company 110 for the execution of various entertainmentfinancing purposes. Trustee 150 normally acts in the interest ofinvestors 130. For example, trustee 150 may be a U.S. bank or othersimilar entity suitable to act in such a capacity. In one embodiment,special-purpose trust 120 may represent a plurality of separate trusts,with each trust associated with one entertainment company 110. Eachtrust may be registered pursuant to a registration statement filed withthe U.S. Securities and Exchange Commission (SEC), with special-purposetrust 120 possibly registered as an investment company. In anotherembodiment, special-purpose trust 120 may be one trust associated with aplurality of entertainment companies 110. Regardless of the particularconfiguration or embodiment of the trust, special-purpose trust 120generally raises funds for entertainment company 110 through theissuance of securities bundles 140.

A securities bundle 140 generally comprises any financial instrument thevalue of which is indexed to at least a portion of the entertainmentrevenue generated by one or more constituent entertainment eventsoffered by an entertainment company 110. Each securities bundle 140typically includes a plurality (or bundle) of securities 145. However,this disclosure contemplates that securities bundle 140 may include anyother suitable security, trust certificate, or any other instrument, orany combination thereof. Accordingly, the use of “securities” is forillustrative purposes only and should not be considered a limitingembodiment of the present disclosure. Return on each of the bundledsecurities 145 is indexed to revenues from particular entertainmentevents as described in greater detail below.

All securities 145 forming part of the same securities bundle 140 areassociated with events at least partially occurring (e.g., producedand/or presented) during a predetermined time period. This predeterminedtime period may be defined by, for example, a closing date and one ormore dividend dates. It will be understood that each date may be a“hard” date, such as a specific calendar date, or a “soft” date, such asa certain amount of time after a relevant event begins or ends.Moreover, there may be multiple dividend dates for multiple securities145, thereby providing a tiered investment. According to certainembodiments, entertainment company 110 may bundle securities 145 formany entertainment events during the set timeframe, thereby potentiallydiversifying risk and reducing volatility. Moreover, securities 145 forentertainment events offered by different entertainment companies 110may be bundled in the same securities bundle 140. These entertainmentcompanies 110 may be from the same or different entertainmentindustries. Each issuance may also be underwritten by brokers 160.

Proceeds from the issuance of securities 145 are paid to entertainmentcompany 110, in accordance with a specified schedule based on anyappropriate criteria, under a series of swaps, or other financialarrangements, entered into by special-purpose trust 120. Each swapentitles special-purpose trust 120 to receive a specified portion of theentertainment revenues from a particular event forming part ofsecurities bundle 140. The revenues will typically derive from primaryrevenues such as, for example, company net profits from ticket sales,record sales, and others. However, the disclosure contemplates analternative or supplemental source of secondary revenues as well,including video or DVD sales, basic or premium television,merchandising, licensing, international box office sales, and such.

In one embodiment, investment system 100 illustrated above is anelectronic, communicably-coupled system distributed over network 108.Network 108 facilitates wireless or wireline communication betweenvarious components of the networked system. Network 108 may communicate,for example, Internet Protocol (IP) packets, Frame Relay frames,Asynchronous Transfer Mode (ATM) cells, voice, video, data, and othersuitable information between network addresses. Network 108 may includeone or more local area networks (LANs), radio access networks (RANs),metropolitan area networks (MANs), wide area networks (WANs), all or aportion of the global computer network known as the Internet, and/or anyother communication system or systems at one or more locations. Indeed,while illustrated as two networks, 108 a and 108 b respectively, network108 may comprise any suitable number and combination of sub-networkswithout departing from the scope of this disclosure, so long as at leastportion of network 108 may facilitate communications between computers102, or any other suitable network devices.

One or more of the illustrated participants of system 100 may be orinclude a computer 102. For example, though computer 102 is illustratedas being associated with special-purpose trust 120, a plurality ofcomputers 102 may be associated with entertainment company 110,investors 130, or other illustrated or non-illustrated participants, orany combination thereof. At a high level, as used in this document, theterm “computer” is intended to encompass a personal computer, serverpool, workstation, server, network computer, personal data assistant(PDA), dumb terminal, cell phone, pager, text message device, mainframe,or any other suitable data processing device. Moreover, “computer” and“user of computer” may be used interchangeably, as appropriate, withoutdeparting from the scope of this disclosure. In other words, investors130, brokers 160, and/or employees of entertainment company 110 ortrustee 150 may each be associated with a computer 102. The computer 102may execute any operating system including UNIX, Windows, Linux, andothers. The present disclosure contemplates computers other than generalpurpose computers as well as computers without conventional operatingsystems. Further, the computer 102 may include and/or execute uniquesoftware, hardware, firmware, or other logical components designedspecifically for communications involving the purchase, issuance, orsale of securities bundles 140. For example, the components may bewritten in any appropriate computer language including C, C++, Java,Visual Basic, and others. Further, the components may be a singlemulti-tasked module or multiple modules. Further, the components mayinclude features and functionality operable to implement any techniquewithin the scope of this disclosure. In other words, such components maybe developed, modified, or produced specifically for financialapplications involving securities bundles 140.

Computer 102 may include a graphical user interface (GUI) 116, whichcomprises, at least, a graphical user interface operable to allow theuser of the computer to interact with one, or more processes executingon the computer. Generally, GUI 116 provides the user of the computerwith an efficient and user-friendly presentation of data employed inorder to initiate transactions or to perform asset-monitoring functionswithin an investment system. GUI 116 may comprise a plurality ofdisplays having interactive fields, pull-down lists, and buttonsoperated by the user. In one example, GUI 116 presents an explorer-typeinterface and receives commands from the user. In another example, GUI116 comprises a screen on a cell phone operable to present the phoneuser with data. It should be understood that the term graphical userinterface may be used in the singular or in the plural to describe oneor more graphical user interfaces and each of the displays of aparticular graphical user interface. Further, GUI 116 contemplates anygraphical user interface, such as a generic web browser, that processesinformation and efficiently presents the information to the user.Network 108 can accept data from the user of the computer via the webbrowser (e.g., Microsoft Internet Explorer or Netscape Navigator) andreturn the appropriate HTML, Java, or eXtensible. Markup Language (XML)responses. The computer may also include an interface card (notillustrated) for communicating with other computer systems over network108 such as, for example, in a client-server or other distributedenvironment. Generally, the interface card in computer 102 compriseslogic encoded in software and/or hardware in a suitable combination andoperable to communicate with the network. More specifically, theinterface card may comprise software supporting one or morecommunications protocols and network hardware operable to communicatephysical signals.

The computer may also include memory 104, which is any memory, harddrive, or database module, any of which may take the form of volatile ornon-volatile memory including, without limitation, magnetic media,optical media, random access memory (RAM), read-only memory (ROM),removable media, or any other suitable local or remote memory component.Memory 104 may include any suitable data or module or not include theillustrated elements without departing from the scope of thisdisclosure. For example, memory may include logical representations ofphysical securities 145 for storing appropriate information associatedwith a securities bundle 140, the associated entertainment events, orother data. In another example, securities 145 may be logical datastructures stored in memory 104. The computer may also include one ormore processors 106 for executing instructions and manipulating data,such as data inputs and outputs, to perform the operations of computer102 and local or remote software modules. It will be understood thatreference to “processor” is meant to include multiple processors whereapplicable.

System 100 has several important technical advantages. One technicaladvantage of system 100 is that it increases accessibility to thefunding process through the use of computers 102 architected usingnetworks 108 to connect investors with facilitators and those seeking tofund a project. This provides an opportunity for a wider range ofinvestors to participate in at least some portion of the entertainmentindustry, whether movies, sports, music, or others. This may alsoincrease the reliability and accuracy of transactions, therebyincreasing transaction volume. Moreover, this may provide for real-timecommunications among parties, thereby increasing the speed andefficiency of transaction processing.

In one aspect of operation, entertainment company 110 first determinesthe appropriate timeframe for funding entertainment events using asecurities bundle 140. For example, this may include determining anexpected closing date and one or more dividend dates for a securitiesbundle 140. One or more entertainment events to be produced and/orpresented by the entertainment company 110 during this timeframe may beincluded in the securities bundle 140. Each such event corresponds witha security 145 in the securities bundle 140. In another example,entertainment company 110 selects and includes within a particularsecurities bundle 140 a fixed number of entertainment events to befunded.

Next, entertainment company 110 determines a funding amount for each ofthe entertainment events within the securities bundle 140. This fundingamount may be a portion or all of the amount required to fund theproduction and/or presentation of a corresponding entertainment event.Entertainment company 110 then associates at least a portion of thefunding amount with securities bundle 140. The entertainment company 110may also establish a suitable return value for the securities bundle140. The return value associated with a security bundle 140 may be apercentage, a dollar value, or any other suitable algorithm fordetermining the rate of return on a securities bundle 140. The returnvalue and the purchase price for securities bundle 140 are determinedbased on the overall design process, including potential investors' 130demand and willingness to pay for a portion of the expected revenue forthe plurality of entertainment events.

Entertainment company 110 may also establish a suitable dividendschedule for the securities bundle 140. The dividend schedule mayinclude one or more dividend dates. In one embodiment, the firstdividend date may involve the investor 130 receiving a distributionindexed to the net revenue of first run U.S. sales associated with oneor more relevant entertainment events. For example, the investor 130holding security 145 indexed to a particular movie may receive a portionof the “rent,” generally considered to be the net revenue of first runU.S. box office sales received by the movie studio for the movie afterthe distribution fees (i.e., exhibitor fees) have been paid. Eachsubsequent dividend date may involve proceeds indexed to the netrevenues (or other secondary revenues) from the prior dividend date tothe instant one. Moreover, each security 145 may providenon-financial—as well as financial—rewards such as, for example, on-setvisitation rights, attendance at a movie premier, screeningopportunities, preferred seating, admission on opening day, and others.The dividends may be determined in conjunction with the correspondingdividend dates.

As described above, securities bundle 140 includes a plurality ofsecurities 145, with each security 145 associated with one entertainmentevent. For example, if a movie company desires 100 million dollars tofund the production of five movies, five securities 145 (one for eachmovie) will be included in securities bundle 140. The example moviecompany may then seek to raise the 100 million dollars by selling anysuitable number of securities bundles 140. The details of the securitiesbundles 140 are provided to special-purpose trust 120, which then offerssecurities bundle 140 to one or more investors 130 for purchase.

As appropriate, investor 130 selects a securities bundle 140 forpurchase. Investor 130 may select securities bundle 140 using anycriteria including expected purchase value, personal preferences,financial data, participants in the associated entertainment events,and/or others. In certain embodiments, entertainment company 110 mayoffer a discount to an investor 130 on the purchase price of a securitybundle 140. This discount may be based on loyalty points earned by theinvestor 130 in association with entertainment events offered byentertainment company 110. For example, an investor 130 may accumulateloyalty points based on purchasing tickets to entertainment eventsoffered by entertainment company 110. These loyalty points may operateas credits towards the purchase of subsequent security bundles 140offered by that company 110. The loyalty points may be validated ashaving been earned by the investor 130 via, for example, a credit cardnumber used to purchase prior tickets, a validated bar code on a ticketstub, or any other validation technique.

Investor 130 may then purchase the securities bundle 140 based, at leastin part, on the purchase price. In a particular embodiment, the investor130 holds the securities bundle 140 until at least the first dividenddate. Once the first dividend date is reached, the negotiated returnvalues for the component securities 145 are used to calculate theproceeds or dividends distributed to the investor 130. In particular,the dividends are calculated by based at lest in part upon thedetermined revenue for an associated entertainment event and thenegotiated return value for a corresponding security 145. For example,where the return value is a percentage, the dividend may be determinedby multiplying the determined revenue by the negotiated return value.Typically, this return value is indexed to the net revenue (or “rent”)of entertainment company 110 for the entertainment event associated withsecurity 145. Returning to the example movie company, the return valuemay be indexed to the domestic box office receipts for one or more ofthe five movies up to the first dividend date. In certain circumstances,an investor 130 may sell all or a portion of a securities bundle 140before and/or after the first dividend date.

Additional dividends may be paid to the holder of any given securitiesbundle 140 according to the remainder of the dividend schedule. Thedividend schedule may terminate according to a milestone associated witha particular entertainment event in the bundle 140. For example, thedividend schedule may terminate a period of time after each movie is nolonger being presented in a specified number of theaters, after eachmovie has been considered for the Academy Awards, or after any othersuitable milestone event for the movie.

FIG. 2 illustrates an example securities bundle 140 in accordance withone embodiment of the present disclosure. Illustrated bundle 140includes three securities 145 a, 145 b, and 145 c, respectively. Eachsecurity 145 includes an associated entertainment event, an opening dateand/or closing date of the event, and one or more dividend datesassociated with a dividend schedule. For example, first security 145 aincludes a first dividend date associated with a first return value anda second dividend date associated with a second return value. Asdescribed above, first dividend date often follows the opening orpremiere date, thereby allowing a first timeframe for determiningreturns on the event based, at least in part, on the first return value.Also, the second dividend date typically follows the first dividend dateand is associated with a second return value. Each of second security145 b and third security 145 c is associated with differententertainment events and may include similar dividend dates and returnvalues. But this disclosure contemplates that second and third security145 b and 145 c may have different dividend dates and return values fromeach other and first security 145 a.

FIG. 3 illustrates an example timeline 300 of a securities bundle 140 inaccordance with one embodiment of the present disclosure. Illustratedtimeline 300 begins when a plurality of entertainment events areselected by entertainment company 110. For example, entertainmentcompany 110 may select events at least partially occurring (e.g.,produced and/or presented) within a predetermined period of time, or byusing any other appropriate selection technique. Once selected, eachevent is associated with a security 145 and bundled into securitiesbundle 140. Securities bundle 140 is then offered to investors 130,typically through special-purpose trust 120. After any appropriateamount of negotiations or commercial discussions, one or more investors130 purchases one or more securities bundles 140. In one embodiment,securities bundle 140 remains bundled throughout the dividend schedulesof each component security 145. In alternative embodiments, securitiesbundle 140 may be unbundled into its component securities 145 at anysuitable time. For example, securities bundle 140 may be automaticallyunbundled at the moment of purchase. In another example, securitiesbundle 140 may be unbundled at the first opening date or premiere of anassociated entertainment event.

Each security 145 of a securities bundle 140 typically follows anparticular path. For example, the entertainment event associated with afirst security 145 premieres. As described above, this may be thepremier of a movie, a first concert in a tour, or any other suitableopening. The next substantive date in the life of each security 145 isthe first dividend date. The first dividend date is normally apredetermined time after the opening or premier of the event and is usedto determine a first return for investors 130 using the associated firstrate of return. For example, first dividend date may occur one hundreddays after the premier of the associated movie. After the first dividenddate, there may be any number of future dividend dates (including zero)for determining subsequent returns using the same, similar, or differentrates of return. Once the final dividend date has occurred and the finalreturns have been calculated and provided, security 145 lapses.

FIG. 4 is a flowchart illustrating an example method 400 for creating orotherwise forming a securities bundle 140 that includes a plurality ofsecurities 145 indexed to particular entertainment events in accordancewith one embodiment of the present disclosure. Generally, method 400describes an example technique, in which one or more entertainmentcompanies 110, and other possible participants, forms securities bundle140 to be indexed to entertainment revenue of certain entertainmentevents offered by the one or more entertainment companies 110. System100 contemplates using any appropriate combination and arrangement oflogical or physical elements or participants implementing some or all ofthe described functionality.

Method 400 begins at step 405, where entertainment company 110 selectsthe particular entertainment industry for funding. For example,entertainment company 110 may comprise a multimedia company with aplurality of entertainment subsidiaries for various types ofentertainment events. Next, at step 410, entertainment company 110determines a bundle 140 for the selected industry. Entertainment company110 then determines an expected closing date for bundle 140 at step 415.A securities bundle template is then generated at step 420. Once thegeneric or empty securities bundle 140 has been generated or otherwisedetermined, entertainment company 110 then adds a plurality ofentertainment events to the particular securities bundle 140 in steps425 through 455.

At step 425, entertainment company 110 selects a first entertainmentevent for bundle 140. Next, entertainment company 110 determines theamount of funding desired for the selected event, at step 430. Thefunding amount comprises at least a portion of the cost for financingthe entertainment event. Next, at step 435, entertainment company 110determines one or more dividend dates and/or a dividend schedule for theparticular security 145. Once the various parameters have beendetermined, entertainment company 110 compiles these parameters anddesigns one or more securities 145 or trust certificates for theselected event, at step 440. Next, at decisional step 445, entertainmentcompany 110 determines if there are more entertainment events to beadded to securities bundle 140. If there are more events to be bundled,then entertainment company 110 selects the next event at step 450 andmethod 400 returns to step 430. Once there are no more entertainmentevents to be bundled, entertainment company 110 provides the securitiesbundle 140 to special-purpose trust 120 at step 452, which then issuessecurities bundle 140 and the component securities 145 at step 454. Themethod terminates at step 456.

FIG. 5 is a flowchart illustrating an example method 500 for purchasingor offering a securities bundle 140, which includes a plurality ofsecurities 145 indexed to particular entertainment events in accordancewith one embodiment of the present disclosure. At a high level, method500 describes an example technique that includes selecting an offeredsecurities bundle 140 and purchasing the selected bundle 140 for amarket determined price. In one embodiment, method 500 begins once thespecial-purpose trust 120 has obtained the information for the formationof one or more securities bundles 140 from entertainment company 110. Aswith the previous flowchart, system 100 contemplates using anyappropriate combination and arrangement of logical or physical elementsimplementing some or all of the described functionality.

Method 500 begins at step 505, where investor 130 selects anentertainment industry that he is interested in funding or otherwisefinancially participating in. Next, at step 510, investor 130 selects aparticular securities bundle 140 associated with the selected industry.Investor 130 then selects a first security 145 in the selectedsecurities bundle 140 at step 515. Next, an expected revenue for theevent associated with the selected security 145 is then determined atstep 520. The determined expected revenue is added to a total expectedrevenue for the selected bundle 140 at step 525. It will be understoodthat the total expected revenue is illustrative of merely one techniquefor determining the total return that investor 130 may expect fromselected securities bundle 140.

Next, at decisional step 530, investor 130 determines if there are moresecurities 145 in securities bundle 140. If there are more securities140, then investor 130 selects the next security 145 at step 535 andmethod 500 returns to step 520. Once there are no more securities 145 insecurities bundle 140, then investor 130 determines a return value and apurchase amount of securities bundle 140 based, at least in part, on thedetermined total expected revenue at step 540. Next, at step 545,investor 130 communicates the determined return value to the bundlecreator, such as entertainment company 110. Investor 130 typically alsocommunicates the desired or expected purchase amount of selectedsecurities bundle 140. If a communicated purchase amount and returnvalue are not accepted by entertainment company 110 or special-purposetrust 120 then investor 130 determines a new return value and purchaseamount at step 555 and method 500 returns to step 545. Once the purchaseamount and return value have been successfully negotiated, then thereturn value is associated with the particular securities 145 at step560. Next, at step 565, investor 130 purchases securities bundle 140based on the accepted purchase value. The method terminates at step 567.

The preceding flowcharts and accompanying description illustrate onlyexemplary methods 400 and 500. In short, system 100 contemplates usingany suitable technique for performing these and other tasks.Accordingly, many of the steps in these flowcharts may take placesimultaneously and/or in different orders than as shown. Moreover,system 100 may use methods with additional steps, fewer steps, and/ordifferent steps, so long as the methods remain appropriate.

FIG. 6 illustrates an example after-market system 600 for offeringfutures or secondary market transactions based on the securities bundles140 initially offered in the system of FIG. 1. Following each initialoffering, securities bundle 140 may be automatically or manually splitor unbundled into the component securities 145, which may beindividually traded through after-market 600, such as a market center600 (or “secondary market”) or futures exchange 620. System 600 includesany suitable number and combination of processing and memory devicesused to perform the features and functions described herein. System 600increases the accessibility of market participants to the trading ofsecurities bundles 140 and/or component securities 145.

According to certain embodiments, the securities 145 may be availablefor trading in the secondary market after the closing date or purchasedate. The secondary market may include a market center 610, such as anelectronic communications network (ECN) or Automated Trading System(ATS). Each securities market center 610 comprises all manner of orderexecution venues including exchanges, ECNs and ATSs. Each market center610 maintains a bid and offer price in a given security 145 by havingparticipants that stand ready, willing, and able to buy or sell atpublicly quoted prices, also referred to as market center prices. Eachmarket center 610 provides market center prices for particularsecurities 145. For example, a first market center may offer aparticular bid price and/or offer price for particular securities 145,while another market center may offer a different bid price and/or offerprice for the same securities 145. Certain market centers 610 may alsocharge a transaction cost in order to execute a trading order. Eachmarket center 610 may also have different policies regarding thedisclosure to market makers of various details of a trading order, suchas, for example, the size of a trading order. Market center 610 may becustomized or otherwise tailored to the entertainment industry orparticular events. For example, the trading of a security 145 may behalted once an underlying entertainment event substantially begins, suchas the opening weekend for a movie.

According to certain embodiments, the secondary market may also includedealers 640, regulators 650, brokers 660, and investors 630. Dealers 640generally act as market-makers in both the market center and the futuresexchange. Regulatory service providers 650 may provide surveillance ofand other market oversight services to one or both example markets.Broker 660 may be any securities broker. Broker 660 may supply anysuitable data involving a security 145 to a potential investor, and mayfacilitate the trading of securities 145 within system 600.

Futures contracts (or options on futures contracts) on each security 145may also be listed on a futures exchange 620, for example the CantorExchange (CX), or other trading facility to enhance liquidity in themarket for one or more securities 145. Futures exchange 620 may beregistered with the Commodity Futures Trading Commission (CFTC).Generally, a futures contract is an agreement to buy or to sell an assetsuch as, for example, a loan, currency, commodity or any suitablefinancial instrument (e.g., a securities bundle 140, any underlyingsecurities 145, or a right to payment based upon an entertainment event)at some time in the future, whereby the price of the asset is agreedupon at the time the agreement is made. Unlike a stock, which representsequity in a company and an asset that can be held for an indefinitetime, the futures contract normally has a finite life. The futurescontract can be used for hedging price-fluctuation risks or for takingadvantage of price movements, rather than for the buying or selling ofthe actual asset.

In one embodiment, parties to a futures contract can agree on a fixedpurchase price to buy the right to a payment that is indexed to somequantifiable parameter associated with an underlying entertainmentevent. For example, a first party could sell to a second party a futurescontract in the right to a $1 payment per each $1 million of revenueearned by an underlying entertainment event. If the futures contract wassold for $50 and the entertainment event earned $55 million upon thesettlement date, then the second party would have netted $5 from thefirst party. If the futures contract was sold for $50 and theentertainment event earned $45 million upon the settlement date, thenthe first party would have netted $5 from the second party. Of course,the values used in this example could vary. Moreover, the right topayment could be associated with any other quantifiable parameterassociated with the underlying entertainment event during any suitableperiod of time (e.g., the number of seats sold to a particular movie ata particular theater; the number of showings of a particular movie; thenumber of theaters in which a particular movie was shown; the number ofdays that a particular movie was shown; revenue at a particular theaterfor a particular movie; etc).

In another embodiment, parties to a futures contract can agree on afixed purchase price to buy a securities bundle 140 or any underlyingsecurities 145 at the expiration of the contract. For example, theseller of this futures contract can agree to sell a securities bundle140 or any underlying securities 145 to the buyer at expiration at thefixed sales price. As time passes, the contract's value changes relativeto the fixed price at which the trade was initiated according to thevalue of the underlying securities bundle 140 or any underlyingsecurities 145. This creates profits or losses for the traders. In mostcases, delivery of the securities bundle 140 or the underlyingsecurities 145 associated with the futures contract does not take place.Rather, the contract is cash-settled based upon, for example, thepurchase price and the value of the underlying securities bundle 140 orsecurities 145 at the time of settlement.

In still other embodiments, parties may offer to take a position on theoutcome of various events associated with an underlying entertainmentevent. For example, a first party may offer to take the position that aparticular movie will gross over $50 million by the first dividend date.A counterparty may offer to take the position that the particular moviewill not gross over $50 million by the first dividend date. A thirdparty intermediary may accept both offers, settle the transaction, andpay the profits on the transaction according to a fixed mathematicalcalculation less a suitable commission (i.e., a return of 11 to 10 on arelatively even proposition). The fixed return determined for anyparticular transaction may be established by the third partyintermediary according to the perceived likelihood of the eventoccurring. The third party intermediary may be any suitable participantin system 600.

System 600 may also include futures commission merchants 665 that areinvolved in the solicitation or acceptance of commodity orders forfuture delivery of commodities related to the futures contract market. Afutures commission merchant 665 is able to handle futures contractorders as well as extend credit to customers wishing to enter into suchpositions. These include many of the brokerages that investors in thefutures markets deal with.

Data related to the securities 145 or the associated futures contractsmay be provided to potential investors 630 via a third-party datasupplier (not illustrated). This data supplier may compile detailedinformation for the entertainment event, such as trading data, from avariety of sources. The details may include financial information suchas current cost of production, current gross revenues, revenues pertheater, dividends, and other fiscal data relevant to investing in aparticular film. The details may also include non-financial informationsuch as, for example, filming locations, genre, the director, actors,producers, and other persons or entities involved in the production ofthe example film, and other suitable industry data. In short, thethird-party data supplier may provide any appropriate information toenable the potential investor to tailor a trade order based on certainfinancial and/or non-financial criteria.

FIG. 7 illustrates an example method 700 for transacting a security 145from securities bundle 140 in an after-market 600 according to oneembodiment of the present disclosure. Generally, method 700 describes anexample technique, in which investor 130 selects one or more securities145 from securities 140 and individually offers the selected securities145 in market center 610 and/or futures exchange 620. After-market 600contemplates using any appropriate combination and arrangement oflogical elements or players implementing or utilizing some or all of thedescribed functionality. In short, after-market 600 contemplates usingany suitable technique for performing these and other tasks.Accordingly, many of the steps in the following flowchart may take placesimultaneously and/or in different orders than as shown. Moreover,after-market 600 may use methods with additional steps, fewer steps,and/or different steps, so long as the methods remain appropriate.

Method 700 begins at step 705, where a securities bundle 140 isidentified. At step 710, the identified securities bundle 140 isautomatically, dynamically, logically, or otherwise unbundled. Next, atstep 715, investor 130 selects first security 145 from securities bundle140. Investor 130 then offers the selected security in a particularafter-market at step 720. It will be understood that this offer does nothave to be binary. For example, investor 130 may offer the selectedsecurity through market center 610, while concurrently negotiating afutures contract through futures exchange 620.

If the selected security 145 is offered through market center 610, thennegotiation and purchasing techniques may be utilized. For example,investor 130 may communicate an offer on the particular security 145 atstep 725. Based on this offer, investor 130 may receive a bid on theparticular security 145 at step 730. If investor 130 does not accept thebid at decisional step 735, then method 700 returns to step 725, whereinvestor 130 may communicate the same or different offer on theparticular security 145. Once the bid is accepted, investor 130 receivesthe purchase funds from the purchaser at step 740. Investor 130 thenprovides the particular security 145 or any representation or datathereof to the purchaser. Next, at step 750, the purchaser details arecommunicated to special-purpose trust 120 for subsequent dividend andreturns.

Alternatively or in combination, the selected security 145 may beoffered through a futures exchange. In this case, the securities bundle140 or any underlying security 145 is associated with a potentialfutures contract at step 755. Next, at step 760, investor 130communicates an offer on the futures contract. At step 765, investor 130may receive a bid on the futures contract based on the communicatedoffer. If investor 130 does not accept the bid at decisional step 770,then method 700 returns to step 760. Once an agreement is reached on thefutures contract associated with a particular security 145, theninvestor 130 receives the purchase funds at step 775. The futurescontract is then provided to the purchaser at step 780. The methodterminates at step 782.

Although this disclosure has been described in terms of certainembodiments and generally associated methods, alterations andpermutations of these embodiments and methods will be apparent to thoseskilled in the art. Accordingly, the above description of exampleembodiments does not define or constrain this disclosure. Other changes,substitutions, and alterations are also possible without departing fromthe spirit and scope of this disclosure.

1. A method comprising: providing, by a computing device, an interfacethrough which a seller may submit information regarding one or morederivative contracts related to one or more respective rights in one ormore respective revenues of one or more respective entertainment eventsproduced by one or more respective entertainment companies; receiving,from the seller by the computing device, an indication of a firstderivative contract that grants a holder of the first derivativecontract a right to a first payment from a first entertainment companywhen a first period of time has ended, in which the payment includes aportion of a revenue earned by a first entertainment event produced bythe first entertainment company during at least a portion of the firstperiod of time, in which the first derivative contract does not grant anequity right in the first entertainment company to the holder;presenting, by the computing device, an indication of the firstderivative contract to a plurality of potential buyers, in which theindication identifies the first period of time, the first entertainmentevent, and the portion of the revenue; receiving, from a buyer by thecomputing device, a bid to buy the first derivative contract for a firstprice; in response to receiving the indication and the bid,facilitating, by the computing device, an exchange of the firstderivative contract between the buyer and the seller; and facilitating aprovision of the first payment to the buyer from the first entertainmentcompany when the first period of time has ended.
 2. The method of claim1, in which facilitating the provision is part of a settlement of thefirst derivative contract.
 3. The method of claim 1, in which the firstpayment is made to the buyer by a device other than the computingdevice.
 4. The method of claim 1, in which at least one of the bid andthe offer is received before a start of the first amount of time.
 5. Themethod of claim 1, in which the first derivative contract grants theholder a plurality of rights to a plurality of respective payments at aplurality of respective dates.
 6. The method of claim 5, in which atleast one of the plurality of respective dates includes a date relativeto at least one of a consideration of the first entertainment event foran award and a reduction in a number of venues for the firstentertainment event.
 7. The method of claim 1, in which the firstentertainment company comprises a movie studio and the firstentertainment event comprises a movie.
 8. The method of claim 1, inwhich the first entertainment company comprises a music productioncompany and the first entertainment event comprises a music release. 9.The method of claim 1, in which the first entertainment companycomprises a promoter and the first entertainment event comprises aconcert.
 10. The method of claim 1, in which the revenue includes aprimary source of revenue related to the first entertainment event. 11.The method of claim 10, in which the first entertainment event includesa movie, and the primary source of revenue is related to ticket sales.12. The method of claim 1, in which the revenue includes a secondarysource of revenue related to the first entertainment event.
 13. Themethod of claim 12, in which the first entertainment event includes amovie, and the secondary source of revenue includes at least one ofvideo and DVD sales of the movie, television revenue for the movie,merchandising revenue for the movie, and licensing revenue for themovie.
 14. The method of claim 1, in which the right to the paymentbased on the revenue includes a right to a payment if the firstentertainment event earns a threshold amount of money by the end of theamount of time.
 15. The method of claim 1, in which the right to thepayment based on the revenue includes a right to a payment if the firstentertainment event earns a threshold amount of money during the amountof time.
 16. The method of claim 1, in which the right to the paymentbased on the revenue includes a right to a payment based on which of aplurality of possible threshold amounts of money the first entertainmentevent earns.
 17. The method of claim 1, in which the right to thepayment includes a right to a payment if the first entertainment eventdoes not earn a threshold amount of money by the end of the amount oftime.
 18. The method of claim 1, in which the right to the paymentincludes a right to a payment if the first entertainment event does notearn a threshold amount of money during the amount of time.
 19. Themethod of claim 1, in which the first period of time is related to apremier date of the entertainment event.
 20. The method of claim 1, inwhich the first entertainment event includes a movie, and the revenueinclude box office receipts.
 21. The method of claim 1, in which thefirst derivative contract is associated with a dividend schedule for thefirst entertainment event, in which the dividend schedule includes atleast one of a date relative to consideration for an award for at leastone of the first entertainment event and a date relative to a reductionto a number of venues in which at least one of the first entertainmentevent remains available.
 22. The method of claim 1, further comprisingfacilitating provision of a non-financial dividend to the holder. 23.The method of claim 22, in which the first entertainment event isassociated with a movie and the non-financial dividend comprises atleast one of: a screening opportunity of the movie; preferred seating ata viewing of the movie; attendance at a premiere of the movie; andon-set visitation during production of the movie.
 24. The method ofclaim 1, further comprising: bundling the first derivative contract witha second derivative contract, in which the second derivative contractgrants a holder of the second derivative contract a right to a secondpayment from a second entertainment company when a second period of timehas ended, in which the second payment includes a portion of a revenueearned by a second entertainment event; and in which the exchangeincludes an exchange of the bundle of the first and second derivativecontracts.
 25. An apparatus comprising: a machine readable medium havingstored thereon a set of instructions that when executed by a computingdevice causes the computing device to perform a method comprising:providing, by a computing device, an interface through which a sellermay submit information regarding one or more derivative contractsrelated to one or more respective rights in one or more respectiverevenues of one or more respective entertainment events produced by oneor more respective entertainment companies; receiving, from the sellerby the computing device, an indication of a first derivative contractthat grants a holder of the first derivative contract a right to a firstpayment from a first entertainment company when a first period of timehas ended, in which the payment includes a portion of a revenue earnedby a first entertainment event produced by the first entertainmentcompany during at least a portion of the first period of time, in whichthe first derivative contract does not grant an equity right in thefirst entertainment company to the holder; presenting, by the computingdevice, an indication of the first derivative contract to a plurality ofpotential buyers, in which the indication identifies the first period oftime, the first entertainment event, and the portion of the revenue;receiving, from a buyer by the computing device, a bid to buy the firstderivative contract for a first price; in response to receiving theindication and the bid, facilitating, by the computing device, anexchange of the first derivative contract between the buyer and theseller; and facilitating a provision of the first payment to the buyerfrom the first entertainment company when the first period of time hasended.
 26. The apparatus of claim 25, further comprising the computingdevice.